Question 1

Which of the following best describes the concept of scarcity in economics?

Accepted Answer

Scarcity refers to the inability to satisfy all wants due to limited resources.

Question 2

Which of the following is NOT considered a factor of production?

Accepted Answer

Money

Question 3

In the context of the production function shown in the diagram, which input is best described as 'human-made resources used to produce goods and services'?

Accepted Answer

Capital

Question 4

Which income is earned by the owners of labor?

Accepted Answer

Wages

Question 5

What is the opportunity cost of attending a concert that costs $50, when your next best alternative is working and earning $80?

Accepted Answer

The $80 you could have earned by working

Question 6

Which statement is a positive statement?

Accepted Answer

"Setting the minimum wage at $15/hour will result in increased unemployment."

Question 7

If the marginal benefit (MB) of an activity is greater than the marginal cost (MC), what should a rational person do?

Accepted Answer

Do more of the activity

Question 8

Which of the following best defines 'human capital'?

Accepted Answer

The knowledge and skills acquired through education and experience

Question 9

Suppose you are deciding how many hours to study for an exam. The first hour gives you 10 extra points, the second hour gives you 8, and the third hour gives you 5. If your opportunity cost per hour is 6 points, how many hours should you study?

Accepted Answer

2 hours

Question 10

In economic models, what does the ceteris paribus assumption allow economists to do?

Accepted Answer

Isolate the effect of one variable by holding others constant

Question 11

Which of the following is an example of a tradeoff?

Accepted Answer

Choosing to spend money on a vacation instead of saving it for a car

Question 12

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies individual choices; macroeconomics studies aggregate outcomes.

Question 13

If a graph shows the relationship between income (x-axis) and household expenditure (y-axis) for a fixed interest rate, what does moving along the curve represent?

Accepted Answer

Changing income while holding interest rate constant

Question 14

What happens to the curve in a two-dimensional graph if a third variable that was previously held constant changes?

Accepted Answer

The curve shifts to a new position

Question 15

Which of the following is a normative statement?

Accepted Answer

"The government should increase spending on education."

Question 16

A business owner is deciding how many employees to hire. If hiring the third employee increases total revenue by $45 and total cost by $30, what is the marginal benefit and marginal cost?

Accepted Answer

Marginal benefit: $45; Marginal cost: $30

Question 17

Which skill is NOT typically sought by employers for economics graduates?

Accepted Answer

Painting skills

Question 18

If the slope of a graph between x=10 and x=20 is calculated as $\frac{y_{20} - y_{10}}{20 - 10}$, what is the slope if $y_{20} = 80$ and $y_{10} = 50$?

Accepted Answer

$\frac{80 - 50}{20 - 10} = 3$

Question 19

In the context of the soap opera example, what does changing Terry's status from 'background character' to 'rock star' illustrate in economic modeling?

Accepted Answer

Shifting the curve due to a change in a third variable

Chapter 1: What is Economics? — Foundations of Microeconomics

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